Afternoon report: Wheat prices faded lower in Monday’s session
This morning, USDA released its highly anticipated September World Agricultural Supply and Demand Estimates report to mixed but mostly positive results after the agency showed lower-than-expected soybean yield estimates and showed a sizeable reduction in this season’s corn production potential. Both corn and soybean prices shifted substantially higher following the report’s release. Wheat prices failed to follow suit, however, succumbing to a round of technical selling that generated small to moderate losses.
Outside of Minnesota and the Dakotas, few parts of the Corn Belt will see measurable moisture between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts seasonally dry conditions emerging across most of the Plains between September 19 and September 25, with warmer-than-normal temperatures likely for most of the United States during this time.
On Wall St., the Dow improved 162 points to 32,314 as investors try to keep the latest market rally rolling forward. Energy futures also moved higher, with crude oil up 1.5% this afternoon to $88 per barrel. Diesel and gasoline each firmed around 1% higher. The U.S. Dollar softened moderately.
On Friday, commodity funds were net buyers of all major grain contracts, including corn (+8,000), soybeans (+8,000), soymeal (+2,500), soyoil (+2,000) and CBOT wheat (+13,000).
Corn
Corn prices jumped higher following today’s WASDE report, which showed average yields declining by nearly 3 bushels per acre compared to August estimates, which triggered a round of technical buying. September futures rose 13.75 cents to $7.1225, with December futures up 9.25 cents to $6.9425.
Corn basis bids were steady to weak on Monday, dropping as much as 40 cents at an Iowa processor and eroding 2 to 20 cents lower at five other Midwestern locations today.
USDA’s latest corn production estimates tumbled 415 million bushels below August totals to 13.9 billion bushels. That assumes a new national yield forecast of 172.5 million bushels per acre (down 2.9 bpa from last month) across 80.8 million harvested acres (down 1.0 million from last month).
On the demand side, USDA slashed total corn use by 250 million bushels, which includes 100 million fewer bushels for feed and residual use, 100 million fewer exported bushels and 50 million fewer bushels for ethanol production. All told, supply is falling more rapidly than use, with USDA lowering ending stocks by 169 million bushels to 1.2 billion.
Corn export inspections were relatively disappointing, spilling moderately lower to 17.6 million bushels for the week ending September 8 and staying toward the lower end of trade guesses, which ranged between 12.8 million and 32.5 million bushels. Mexico was the No. 1 destination, with 7.3 million bushels. Cumulative totals for the young 2022/23 marketing year have started off stronger than year-ago totals, with 22.0 million bushels.
Ahead of this afternoon’s crop progress report from USDA, analysts think the agency will hold corn quality ratings steady, with 54% of the crop in good-to-excellent condition through September 11. Harvest progress is expected to reach 4% through Sunday, with individual trade guesses ranging between 3% and 5%.
Preliminary volume estimates were for 307,219 contracts, moving well ahead of Friday’s final count of 178,402.
Soybeans
Soybean prices spiked 4% to 5% higher after USDA unexpectedly reduced yield estimates by a full bushel per acre in today’s WASDE report. In contrast, analysts were expecting those estimates to hold steady from last month’s report. September futures climbed 60.5 cents to $15.4975, with November futures up 73.5 cents to $14.8575.
Soybean basis bids were steady to weak across the central U.S. on Monday after spilling 10 to 68 cents lower across five Midwestern locations today.
USDA raised its beginning stocks for 2022/23 due to a lower-than-expected amount of exports in 2021/22. Production estimates fell 152 million bushels to 4.4 billion based on lower harvested area and yields. Harvested aces is expected to decline by 600,000 acres to 86.688 million, while average yields took an unexpected 1.4-bpa dip to 50.5 bpa. Ending stocks remain historically tight, declining another 45 million bushels to just 200 million.
Soybean export inspections for the week ending September 8 came in at 12.1 million bushels. That was below the entire range of trade guesses of 14.7 million to 23.9 million bushels. China was the No. 1 destination, with 5.4 million bushels. Cumulative totals for the 2022/23 marketing year are up from year-ago totals so far, with 14.0 million bushels.
Prior to this afternoon’s crop progress report from USDA, analysts expect to see stable soybean quality ratings, with 57% of the crop in good-to-excellent condition through Sunday. Individual trade guesses ranged between 56% and 58%.
How do your farm’s crop conditions stack up against other operations in the U.S.? Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can peer anecdotes from around the country.
Preliminary volume estimates were for 266,851 contracts, more than doubling Friday’s final count of 107,703.
Wheat
Wheat prices saw modest to moderate losses following some technical selling to start the week. December Chicago SRW futures fell 11.5 cents to $8.58, December Kansas City HRW futures eased 1.25 cents to $9.28, and December MGEX spring wheat futures dropped 4.5 cents to $9.23.
USDA made no changes to its 2022/23 U.S. wheat outlook for supply and use. The agency did lower its season-average farm price by 25 cents to $9.00 per bushel due to recent trends but does note that this is still a record SAFP if it holds.
Globally, USDA expects a higher production in Russia, with a new estimate of 3.344 billion bushels. Ukraine’s production potential, on the other hand, also trended higher from a month ago but will end up being significantly lower year-over-year, at around 753.2 million bushels. Both countries are typically among the top wheat exporters in the world.
Wheat export inspections climbed moderately higher week-over-week to 27.1 million bushels and bested the entire set of trade estimates, which ranged between 9.2 million and 23.0 million bushels. Mexico was the top destination, with 7.6 million bushels. Cumulative totals for the 2022/23 marketing year are still trending moderately below last year’s pace, with 235.2 million bushels.
Ahead of USDA’s crop progress report, out Monday afternoon, analysts think the agency will show winter wheat plantings move from 3% a week ago to 10% through Sunday. This season’s spring wheat harvest is expected to move from 71% completion last week to 83% as of September 11.
The Ukrainian Agrarian Council said today that the country’s winter grain plantings could be 30% lower compared to a year ago amid the ongoing Russian invasion. That includes a winter wheat footprint of around 9.3 million acres. “The main reasons that encourage agricultural producers to reduce sown areas are the high cost of fertilizers, problems with the sale of grain, as well as too low purchase prices for agricultural products,” according to UAC.
Meantime, Russia’s Sovecon consultancy estimates that the country’s wheat exports will climb to 161.7 million bushels. If realized, that would be the highest monthly tally since last September, when wheat exports reached 170.9 million bushels. Russia is the world’s No. 1 wheat exporter.
Egypt’s supply minister reported today that the country’s strategic wheat reserves are sufficient to cover more than six and a half months.
Preliminary volume estimates were for 75,567 CBOT contracts, which was slightly lower than Friday’s final count of 81,843.
Settlement Prices for Key Commodities
High
Low
Last
Change
Corn $/bushel
22-Sep
721.5
689
712.25
13.75
22-Dec
699.5
675.75
696
9.25
Soybeans
22-Sep
1558.25
1472.5
1549.75
60.5
22-Nov
1490.25
1402.25
1488.25
73.5
Soymeal $/ton
22-Oct
444.8
413.8
439.8
23.9
Soyoil cents/lb
22-Oct
69.33
65.97
68.34
1.7
Wheat $/bushel
22-Sep
852.5
837
841.25
-12
22-Dec
878
848.5
858.75
-11.5
KC Wheat
22-Sep
931.75
926
937.25
0
22-Dec
936.25
914.25
927
-1.25
MPLS Wheat
22-Sep
907.5
907.5
913
-2.25
22-Dec
931.75
910
926.5
-4.5
Live Cattle cents/lb
22-Oct
146.1
145.45
145.8
0.125
Feeder Cattle cents/lb
22-Oct
186.2
182.875
183.2
-2.375
Lean Hogs cents/lb
22-Dec
83.8
82.525
82.825
-0.3
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Oct
89.1
85.16
87.69
0.9
Diesel
22-Oct
3.705
3.5589
3.6021
0.0234
Unleaded Gasoline $/gallon
22-Oct
2.4949
2.3951
2.4452
0.0121
Natural Gas
22-Nov
8.447
7.911
8.353
0.309
U.S. Dollar Index
22-Sep
108.865
107.8
108.335
-0.662
Gold $/ounce
22-Oct
1736.4
1712.7
1727.7
11.5
Copper
22-Sep
3.6265
3.552
3.624
0.043
Fertilizer Swaps
(as of 09/02)
DAP Tampa-index
820.0
0
DAP-New Orleans
833.9
18.19
Urea-New Orleans
766.1
82.67
Urea-Middle East
863.0
68.5
Urea-Black Sea
585.0
35
UAN (32%) New Orleans
531.9
55.12
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